Workers' Compensation

California: What Constitutes a Diminishment in a Benefit When It Comes to an ADR?

In Ramirez Farias v. Able Building Maintenance, 2016 Cal. Wrk. Comp. P.D. LEXIS --, the WCAB, in a split panel opinion, found that the applicant, who suffered an industrial injury to her neck, back, right wrist, and right shoulder from 2/28/2005 through 1/22/2014, and was treating outside of an alternative dispute resolution (ADR) agreement based on the denial of her claim by the defendant, was required to transfer treatment to the ADR agreement’s exclusive provider network after the defendant accepted her claim, pursuant to the provisions in Labor Code § 3201.5 and the terms of the ADR agreement.

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The WCAB panel majority reasoned that the agreed list of medical providers in the ADR agreement differs from medical provider networks (MPN) established pursuant to Labor Code § 4616, that MPNs are regulated by the Administrative Director and subject to the statutory constraints such as those in Labor Code § 4603.2(a)(2) addressing the transfer of treatment into an MPN, that Labor Code § 3201.5 allows the use of an agreed list of treaters and allows the parties to the agreement to negotiate any aspect of medical treatment delivery, and that the MPN statutes, including Labor Code § 4603.2, do not apply to medical treatment negotiated pursuant to a collective bargaining agreement.

Commissioner Sweeney, dissenting, opined that since the ADR agreement was silent on the transfer of care after the employee has self-procured treatment from a provider who is not on the agreed provider list, and there was no dispute resolution mechanism for this dispute, the MPN provisions in the Labor Code, which allow the employee to continue treatment with the doctor outside the employer’s MPN when there has been a final determination that the employee was entitled to treat outside the MPN, should apply, or, alternatively, that requiring the applicant to transfer care is a diminishment of the applicant’s entitlement to medical benefits and that the portion of the bargaining agreement that diminishes the applicant’s entitlement to benefits is void.

Read the Ramirez Farias noteworthy panel decision.

Commentary:

Farias addresses a critical aspect of Alternative Dispute Resolution (ADR) systems that are created as a result of the Collective Bargaining process. Labor Code Sections 3201.5(b)(1) and 3201.7(b)(1) guarantee that an ADR program or a “carve-out” will provide at least the same benefits afforded by the workers’ compensation process. Indeed, these sections specifically provide that there shall be no collective bargaining agreements establishing an alternative dispute system that serve to diminish the entitlement to various benefits, including medical treatment.

These two sections ensure two things: one, worker’s compensation benefits will not be used as bargaining chips during the negotiation of collective bargaining agreements and, two that employees receive at least the oftentimes meager benefits currently provided to them through the workers ’ compensation process. In Farias, the question was whether the employee’s medical treatment rights had been diminished when the arbitrator ruled that once his claim was accepted, the employer had the right to control his treatment despite the specific rules governing the transfer of care of an employee treating outside of a Medical Provider Network (MPN) to a doctor within the MPN that are applicable in workers’ compensation cases.

While it is completely true that Section 3201.5(b)(2) provides the parties to a collective bargaining agreement may negotiate any aspect of the delivery of medical benefits, that should not serve to trump Sections 3201.5(b)(1) and 3201.7(b)(1). In Farias, the majority effectively concluded that Section 4603.2 does not apply to medical treatment benefits negotiated pursuant to a CBA. However, it is submitted that the majority’s conclusory opinion really misses the most important question raised by the case.

The dissent raised this very point. Commissioner Sweeney argued that if the transfer of care requirements are absent from the CBA, either Labor Code Section 4603.2 should be applied or the CBA provisions concerning applicant’s entitlement to medical treatment should be deemed “void”.

In conclusion, the majority’s decision in Farias could be interpreted to indicate that where the medical treatment is “negotiated” pursuant to a CBA, it does not really matter what the specific provisions of the medical treatment benefit are or whether those provisions serve to diminish the employee’s rights to medical treatment under the Workers ’ Compensation System. According to the State of California’s statistics, there are at least 34 ADR programs operating in California. As more ADR’s are established, how Sections 3201.5(b)(1) and 3201.7(b)(1) are interpreted will become increasingly important.

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